Federal Home Loan Mortgage Corporation - Page 1

                                   121 T.C. No. 8                                     

                               UNITED STATES TAX COURT                                

                FEDERAL HOME LOAN MORTGAGE CORPORATION, Petitioner v.                 
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket Nos. 3941-99, 15626-99.     Filed September 4, 2003.            

                    P was chartered by an act of Congress in 1970 and                 
               was originally exempt from Federal income taxation.                    
               Pursuant to the Deficit Reduction Act of 1984 (DEFRA),                 
               Pub. L. 98-369, sec. 177, 98 Stat. 709, P became                       
               subject to Federal income taxation, effective Jan. 1,                  
               1985.  For its taxable years 1985 through 1990, P                      
               claims entitlement to amortize intangibles using a fair                
               market value basis as of Jan. 1, 1985.  P’s claim that                 
               it is entitled to use fair market value as its adjusted                
               basis for amortization is based on the provisions of                   
               DEFRA that specifically apply only to P.  R determined                 
               that P’s adjusted basis for amortizing any intangibles                 
               is the regular adjusted cost basis of those assets as                  
               of Jan. 1, 1985.                                                       
                    Held:  Under sec. 167(g), I.R.C., the basis for                   
               amortization of property is the adjusted basis provided                
               in sec. 1011, I.R.C., for the purpose of determining                   
               gain on the sale or other disposition of property.  The                
               adjusted basis provided in sec. 1011, I.R.C., is                       

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